Joint PH-Canada mining project restructures

It’s full steam ahead for the country’s second biggest active mining operations, the King-king copper and gold project based in Compostela Valley.

The Nationwide Development Corp. (Nadecor) announced on Monday that it has signed an agreement with their Toronto-based partner, St. Augustine Gold and Copper Ltd., to restructure its interests in the King-king mining project in Mindanao.

Nadecor and St. Augustine’s boards both voted in favor of the restructuring. St. Augustine’s strategic Philippine partner, Queensberry Mining and Development Corp.,—owned by the family of former Sen. Manny Villar—also signed the restructuring documents and expressed its full support for the plan. Queensberry owns 18 percent of St. Augustine.

“This is a very important milestone for our partnership and is definitely a positive for both St. Augustine and Nadecor shareholders,” Conrado Calalang, president of Nadecor, said during a press briefing at the Shangri-La Hotel in Makati City on Monday.

Once approved, the restructuring would result in St. Augustine holding a 100-percent interest in the joint venture milling company, as well as assuming full responsibility for organizing the financing for the project.

The structure of the joint venture mining company would remain the same as was agreed originally between the parties, with Nadecor owning 60 percent and St. Augustine owning 40 percent, in accordance with the nationality requirements under Philippine laws.

The relationship between the mining company and milling company would remain as originally planned, with the former selling ore to the latter pursuant to an ore sales agreement. The still unnamed milling company would process the ore and subsequently sell it to interested buyers. The restructuring would also result in Nadecor shareholders owning 39.96 percent of St. Augustine.

“Simplifying the structure of the joint venture is beneficial for a number of reasons,” said Andrew Russell, chief executive officer of St. Augustine.

“Firstly, it fully aligns the interests of Nadecor, St. Augustine and their respective shareholders in the project. Secondly, from a strategic perspective, we believe the new structure increases the attractiveness of the project to potential strategic partners supportive of bringing King-king into production as soon as possible,” he added.

Under the restructuring, St. Augustine would make available, on a pro-rata basis to Nadecor shareholders, 324.57 million shares of St. Augustine at a deemed price of 10 centavos per share. This would represent 39.96 percent equity in St. Augustine on a fully diluted post-restructuring basis.

Public listing planned
While presently a private company, plans are afoot to sell shares to the public via the Philippine Stock Exchange (PSE) in 2014.

According to Nadecor Chairman Ambassador Roberto Romulo, the company plans to go public “by the second half of next year.”

The closing of the restructuring is subject to certain approvals and other conditions, including approval from the Toronto Stock Exchange.

Certain aspects of the proposed restructuring will be subject to corporate approvals by both companies.

St. Augustine shareholders will be entitled to vote on the proposed transaction during the annual general meeting of shareholders currently planned to be held on December 16, 2013.

Considering the significant Filipino shareholding of St. Augustine resulting from the restructuring as well as the desire to attract Asian investors, St. Augustine has agreed in the restructuring documents to pursue a secondary listing on the PSE by way of introduction.

Institutional investors from China, Japan and South Korea have expressed interest in purchasing shares of the company. This is because of the strong demand from their various industries for copper.

The project is expected to recover 3.16 billion pounds of copper and 5.43 million ounces of gold over its 22-year mine life.

Good news for the people of Davao del Norte. This development will surely bring in more opportunities and boost the economic activity not only in Pantukan but the adjacent municipalities as well. Let us all hope that the mine will be smooth sailing as it brings in revenues for the government.